- Increasing odds of a 0.5% Fed rate cut in November.
- Markets await strong evidence on US rate cuts
The US dollar fell in European trade on Tuesday against a basket of major rivals, resuming the losses under pressure after bearish remarks from some Fed officials.
The remarks boosted the odds of a 0.5% Fed interest rate cut in November.
The Index
The dollar index fell 0.2% today to 100.76, with a session-high at 101.05.
The index closed up 0.2% on Monday, rebounding from 14-month lows at 100.22.
Bearish Remarks
Fed policymakers said in earlier remarks that the 0.5% rate cut last week was aimed at maintaining a growing and healthy economic balance.
Chicago Fed President Austin Goolsbey said there will be “a lot of rate cuts” in the next 12 months, while Minneapolis Fed President Neil Kashkari said the actual path forward for interest rates will depend on data.
US Rates
Following the remarks, and according to the Fedwatch tool, the odds of a 0.5% Fed interest rate cut in November rose to 51%, while the odds of a 0.25% slipped to 49%.
- US dollar decline boosts gold
- Markets await more data on US interest rate cuts
Gold prices rose in European trade on Tuesday, extending gains for the fourth straight session and scaling a fresh record high, as the dollar lost ground against most rivals.
Earlier cautious remarks from some Fed officials boosted the odds of another 0.5% interest rate cut in November.
Prices
Gold prices rose over 0.4% today to $2640 an ounce, a record high, with a session-low at $2622.
On Monday, gold prices rose 0.3%, marking the third profit in a row, amid growing concerns about the global economy, and mounting geopolitical tensions in the Middle East.
The Dollar
The dollar index fell 0.2% on Tuesday against a basket of major rivals, in turn underpinning the greenback-denominated gold futures.
Cautious Remarks
Fed policymakers said in earlier remarks that the 0.5% rate cut last week was aimed at maintaining a growing and healthy economic balance.
Chicago Fed President Austin Goolsbey said there will be “a lot of rate cuts” in the next 12 months, while Minneapolis Fed President Neil Kashkari said the actual path forward for interest rates will depend on data.
US Data
Following the remarks, and according to the Fedwatch tool, the odds of a 0.5% Fed interest rate cut in November rose to 51%, while the odds of a 0.25% slipped to 49%.
The SPDR
Gold holdings at the SPDR Gold Trust were flat yesterday at a total of 875.39 tonnes, the highest since January 2.
- The RBA holds interest rates unchanged for seventh straight meeting
- Bets of RBA rate cuts recede
The Australian dollar rallied in Asian trade to 2024 highs against the US dollar, extending gains for the second day after a bullish stance from the Reserve Bank of Australia.
The RBA held interest rates unchanged for the seventh meeting in a row, and cautioned there remains reasons for vigilance against inflation risks.
The Price
The AUD/USD pair rose 0.4% today to 0.6865, the highest since December 2023, with a session-low at 0.6826.
Aussie rose 0.45% on Monday against the greenback, marking the fifth profit in six sessions as the risk appetite improved, and China prepared massive new stimulus measures to boost the economy.
The RBA
As expected, the Reserve Bank of Australia maintained interest rates unchanged at 4.35%, already the highest since November 2011.
The RBA said it’s important that monetary policies remain constrictive to ensure that inflation is sustainably heading towards the 2-3 target.
It added that inflation remains above targets, and the central bank will remain cautious and vigilant for risks.
Australian Rates
Most analysts now don’t expect the Reserve Bank of Australia to start cutting interest rates until 2025.
Most cryptocurrencies rose on Monday as the risk appetite rebounded following the Federal Reserve’s policy decision.
The Federal Reserve announced a 0.5% interest rate cut last week, while many analysts expected a 0.25% cut.
The Fed has thus turned finally into policy easing after two years of aggressive policy tightening to control inflation.
Earlier US data showed the combined PMI index at 54.4 in September, down slightly from August’s 54.6.
The US manufacturing PMI slipped to 47 in September from August’s 47.9, marking a 15-month low.
The US services PMI declined to 55.4 in September from August’s 55.7.
Ethereum
On trading, ethereum rose 4% as of 20:40 GMT on Coinmarketcap to $2674.5.
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